Starting a new business can be quite challenging. You will obviously need to finance your new business. How you go about this will depend on what type of business you have in mind in addition to your own personal financial situation. There are various sources of business loans and financing you could use to get capital for the business, so if one doesn’t pan out, do not be discouraged. Here are some simple tips to set the ball rolling.
1. Conceive A Business Plan
Some people make the mistake of asking for a loan without having a plan. They want to start a business and ask for help and they end up being turned down. That’s hardly surprising. Before you go to the bank, make sure that you have a detailed business plan that you know thoroughly. When queried, you must be able to explain. Document it and have this template with you to present to the bank. Be able to explain:
- Managing the business
- Your marketing plan
- Your challenges and overcoming it
- Managing cash flow
2. Research Thoroughly
Before seeing your banker, do proper research in the field of the business you wish to start. Be fully aware of the challenges and trends in that particular field. Doing this research will also prove to your banker that you’re willing to go that extra mile and that you’re fully committed to the cause. You can research government reports, industry reports and even those in the same business. A banker will likely want to see your own plans rather than one drawn up by an accountant.
3. Invest Your Own Money First
To prove how serious you are, it will help you to secure a loan if you’ve already invested your own money into the project. When bankers see that you’ve risked your own money as well, it will be easier to obtain a loan. This proves your commitment, which is a big plus in your favour.
4. Other Sources
It’s important to keep your options open. Don’t just rely on the bank as your sole option, because it isn’t. If you’ve done the steps shown above and everything is in order and makes financial sense, it’s possible that you’ll get the loan. If not, you could consider a government grant. This grant will have certain terms and conditions, but if you comply to the letter, the good thing is that it doesn’t have to be repaid. You could also ask family and friends for loans. Other options include angel investors and venture capital investors. The show “Dragons’ Den” features venture capitalists.
In conclusion, do not be too disheartened if a bank says no. There are many options available and you could also combine them, so don’t give up!